Are you in a financial jam and you feel like bankruptcy is the only option for you? Do not feel as if you are on your own. Some people have turned to bankruptcy, as it is their only option for getting rid of a bad financial situation. So have a look through the contents of this article to see what you should know about bankruptcy.
Most people end up filing for personal bankruptcy because they owe more than they make. Study the laws in you state to learn what you need to do and what your options are. Laws differ from one state to the other. Your home and other major assets may be protected in your state, while they are vulnerable in other states. You should be aware of local bankruptcy laws before filing.
Credit Card
Do not use a credit card to pay income taxes and then file for bankruptcy. In many areas of the country, this debt will not be dischargeable, and you could be left owing a significant amount to the IRS. A common rule is that dischargeable tax means dischargeable debt. Therefore, you should not pull your credit card out for purchases if it is just going to be discharged during the bankruptcy.
If filing bankruptcy is in your future, don’t waste any savings you may have attempting to pay off your debts. Avoid ever touching retirement funds until you have no other choice. You may need to tap your savings, but don’t empty your savings account, as this could leave you in a difficult situation down the road.
Don’t file for bankruptcy until you know what assets of yours can and can’t be seized. The Bankruptcy Code lists the kinds of assets which are exempted when it comes to the bankruptcy process. You need to read the exemptions for your state, so you know what property you can protect. Without reading the list, you may be shocked at which possessions can be taken from you.
Bankruptcy Lawyer
Never pay for a consult with a bankruptcy lawyer, and ask plenty of questions. Most lawyers offer free consultations, so talk to a few before making your decision. Therefore consult with different lawyers and get a feel for them, then decide which one suits your needs There is no need to feel rushed to decide to file after you talk with your bankruptcy lawyer. After your consultations, do some additional research on each attorney you consider qualified for the job.
Understand the differences between Chapter 7 and Chapter 13 bankruptcy. In Chapter 7 most of your outstanding accounts will essentially be erased. Any ties you have concerning creditors will definitely be dissolved. On the other hand, filing for bankruptcy under Chapter 13 means you will have 60 months to pay your debts back. Look into both types of bankruptcy before deciding which one would suit your particular needs.
Before declaring bankruptcy, see if there’s anything less drastic you can do to repair your credit. There are many other options including debt consolidation and making payment plans with your creditors. A plan that can be useful when foreclosure is looming is a loan modification. Your creditors will be willing to work with you to allow you to pay off your debts. They may be able to take late fees off of your account, cut down your interest, or even extend the loan’s repayment period. Most creditors will be willing to work out an option to avoid not getting paid at all.
There are circumstances where you are able to keep your car during a bankruptcy so be sure to ask your lawyer about possibly reducing the payments. It is possible to get your car payment lowered if you file using Chapter 7. Here are the qualifications in regards to your vehicle: you must have bought it nine hundred and ten days or more before filing for personal bankruptcy; your loan must carry high interest; your work history must be steady and solid.
As mentioned at the beginning of the article, you are not the only person in the world who has found themselves needing to file bankruptcy. Yet one thing you have that others who file do not is the information from this article. To make filing bankruptcy easier, use the advice from this article.
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